FCA focuses on improving treatment of vulnerable customers

Aug 2nd '19

On 23 July, the financial regulator launched a consultation on proposed guidance for firms on the fair treatment of vulnerable customers.


Launching the consultation, the FCA said that although ‘significant progress’ has been made in firms’ approaches to vulnerable customers, more consistency is needed across the industry. Some firms are still failing to consider vulnerable customers, leading to harm.


  • What is the FCA doing to help vulnerable customers?

Fair treatment of all customers is something the regulator has long focused on. And in its 2019/20 Business Plan it highlighted ‘demographic change’ as one of its priority areas, outlining its intentions to ‘consult with firms on the identification and treatment of vulnerable customers’.


The FCA’s involvement in the Competition and Markets Authority’s super complaint about loyal customer pricing also relates to concerns that the so-called ‘loyalty penalty’ is disproportionately paid by vulnerable consumers, such as older people and those with mental health issues.


  • What does the new guidance say?

The guidance sets out the FCA’s view of what the FCA Principles require of firms to ensure that vulnerable consumers are consistently treated fairly across financial services sectors.


The announcement says that the regulator wants to see ‘doing the right thing for vulnerable consumers deeply embedded in firms’ culture’.


To achieve this, organisations ‘will need to think about what the guidance means for their business and customers, and how they are understanding and addressing the needs of vulnerable customers’.


The regulator reports that it has been working extensively with stakeholders in the area of vulnerability. And while many firms have made ‘significant progress’ in the way they tackle the issues, there is still a need for greater consistency. In some cases, the Authority notes, ‘firms are clearly failing to consider the needs of vulnerable consumers, leading to harm’.


  • What happens next?

The FCA is consulting on the draft guidance. The guidance can be read on the regulator’s website and responses need to be sent in by 4 October 2019.


You can send your responses on the proposed guidance:


  • By post to: Consumer Strategy Team, Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN


  • How to ensure you are treating vulnerable customers fairly

The revised FCA guidance will provide direction for firms on their treatment of vulnerable customers. While we wait for it to be finalised, there are some steps you can take to make sure your approach follows best practice around vulnerability:


Make sure you understand the regulator’s definitions of, and requirements around:



All of which are relevant when it comes to treating any customers – but particularly those who may be vulnerable – fairly.


Review your current approach: how do you currently communicate with your customers? Are you confident that everything you send out adheres to the FCA’s guidance on TCF, is fair, clear and not misleading and delivers the regulator’s required consumer outcomes?


Would you communicate in the same way to a client if you knew they were vulnerable? How might your approach differ?


And how would you identify that they were vulnerable in the first place? Audit your current processes to ensure that you are able to identify these contacts.


Develop clear policies; standardised and well-communicated guidelines on how to spot a vulnerable client, and how to alter your approach once someone has been identified as such.


Ensure everyone in the firm has seen and understands your policy. Have clear rules on how these customers should and should not be treated.


Continuously improve your approach; evaluate your processes and measure how well they serve your vulnerable consumers. This will enable you to refine your approach. Do you ask customers about their experiences? What do they tell you you’re doing well, and what could be done better?


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